Pine Gap may sell homes as housing starts drop

The number of housing starts in the March quarter fell in the Northern Territory by 24.7% and values may take a hit if reported sales of staff homes by Pine Gap go ahead.

The NT is lagging well behind NSW where housing starts grew by 24.1% and in the ATC rose by a whopping a 44.1%.

There were increases also in Queensland (13.1%), Victoria (11.6%) and Tasmania (6.6%).

Going down were WA, by 9%, and SA, by 3.1%, according to the latest ABS figures.

Neilia Ginnane (pictured), Executive Director – NT of the Housing Industry Association (HIA), the voice of Australia’s residential building industry, says the reasons for the poor results in the NT are the shrinking of the population, large projects such as INPEX in Darwin moving from the construction to the operational phase, the mining downturn, falling commodity prices, and investors’ uncertainty usually accompanying elections.

In Alice Springs Doug Fraser, of L J Hooker, says: “The property market, which was overheated in 2010/2011, has now become much more stable with prices slowly starting to rise, although not at the same rate as in the past.”

Mr Fraser, who has been in the local real estate industry for about 40 years, says in his quarterly report that the rental market has improved significantly with vacancy rates now “at manageable levels and rents are much more affordable”.

He says apparently planned sales of Pine Gap houses later this year will have an effect on rents and prices: It is likely to be good news for the rental market but the impact on home prices would depend on the number of properties coming on the market.

Mr Fraser says it would be “silly” to flood the market, and any release should be staggered.

The Alice Springs News Online is seeking comment from Pine Gap.

Ms Ginnane cautions that because of the small samples in the NT, statistics can make the situation appear more troubling than it really is: For example, the 2.1% decline in NT home loans in the March quarter equals just four loans. The 8.5% drop in loans from May 2015 to May 2016 means there were just five fewer.

The decrease in demand for small dwellings in Alice Springs is illustrated by the sales history of the complex in Larapinta Drive (pictured at top), built under the Affordable Homes scheme of the Giles Government, and targeted at investors.

Although all units have tenants only eight of the 25 have been sold, says Jo-Anne Pulsford (at left), of Elders Real Estate.

This is despite the fact that the government is guaranteeing for 10 years rents of $480 a week for two-bedroom units and $570 for three-bedroom units.

The complex does not qualify for the First Home Buyers Grant. The asking price, which is negotiable, says Ms Pulsford, is $410,000 (2BR) and $475,000 (3BR).

Mr Fraser (at right) says in his report: “Analysis of figures for the financial year ending June 2016 have revealed some interesting trends.

“House and unit sale numbers have been the lowest for over a decade with 257 house and 145 unit sales for the year.

“These numbers are significantly below the high water mark of 2006 which had 540 house and 357 unit sales, and well below the average over the past 10 years of 396 house and 235 unit sales.

“Median sale prices have remained reasonably static with houses increasing from $461,000 in 2011 to $485,000 this year and units decreasing from $346,000 to $335,000.

“Sale numbers increased slightly during the June quarter with 60 house sales compared to 46 sales in the March quarter and 44 unit sales compared to 31.

“The increase in unit sales can be largely attributed to the 18 sales of units in the refurbished developments at 3 Allchurch Street and 70 in Palm Circuit (South Edge) which all attracted the Government’s First Home Buyers Grant.

“There were also five up-market unit sales in Hawkins Place purchased by the Defence Housing Authority.

“There were therefore only 21 established unit sales for the quarter, which is significantly below the average, and is reflective of the Government’s decision to remove the First Home Buyers Grant for established properties,” says Mr Fraser.

“On a positive note, there were a number of up-market house sales recorded for the quarter including a house in Range Crescent for $1.25 million, a sale in Baldissera Drive also for $1.25 million, a sale in Cromwell Drive $910,000 and a sale in Higgins Court for $888,000.

“Defence Housing were also active in the house market acquiring four properties in the $720,000 to $850,000 price range. These sales indicate a level of confidence in the higher priced Alice Springs property market.

“The NT Government’s Budget contained some assistance for first home buyers purchasing established dwellings by providing 50% Stamp Duty relief up to a maximum of $10,000.

“Whilst this decision is welcomed, it is our view that it has done little to stimulate the housing market,” says Mr Fraser.

“It is also ‘revenue neutral’ for the Government as they were not receiving Stamp Duty revenue prior to making this decision, so it has had no effect on ongoing expenditure.

“There was reasonable activity in the commercial and industrial market over the past 12 months with a number of significant sales above $800,000.

“These included a commercial property in Hartley Street for $880,000, a light industrial property in Hele Crescent for $985,000, two commercial properties on the North Stuart Highway for $1 million and $1.85 million, and a commercial property in Hartley Street for $2.85 million.

“There were also a number of smaller light industrial sales predominantly in the Gillen and Smith Street industrial precincts.”

Mr Fraser says the real estate market will be influenced by several events in the near future:–

• The outcome of the NT Election in late August. The CLP and the ALP have different views on the First Home Buyers Grant being available for established dwellings. The ALP is for and the CLP is against the grant.

• The effect of Brexit on the world’s economy and subsequently on interest rates and the Australian Dollar, affecting our tourist industry.

• Continued low interest rates will have a positive effect on the market.

• Population increases and decreases have a direct impact on the property market.

Says Mr Fraser: “Whilst we cannot predict future outcomes based on these factors, we do believe that Alice Springs will continue to grow and prosper over the next 12 months and beyond.

“We have gone through some short term pain for some long term gain which we believe will be to everyone’s benefit.”